With the 2024 presidential election looming closer, Americans worry how November’s election results will affect their wallet — especially as tax laws that were part of the Tax Cuts and Jobs Act are set to expire.
In a recent Fox News segment (via MSN), Secretary of the Treasury Janet Yellen said, “The President has been very clear that no family earning less than $400,000 will face a tax hike… He’s not proposing to allow that to happen when parts of TCJA expire.”
However, “Shark Tank” investor Kevin O’Leary explained to Fox News that raising taxes on the wealthiest Americans could hurt the middle class. “Taxing the rich is always a good message. That rhetoric’s gone on for decades,” he said. “[But] imposing tax hikes right now is a mistake.”
He said that high inflation is, essentially, a “hidden tax” on the middle class. Although some analyses show that inflation disproportionately affected lower-income individuals in recent years, that isn’t always the case.
A report from the New York Fed indicated that when the prices of used cars and fuel at the pump were primary drivers behind inflation in 2022, inflation placed a higher burden on the middle class.
However, as the price of cars and fuel dropped, with housing and grocery prices continuing to rise, Americans in the lower 40% of income brackets started to feel the crunch.
It’s also important to realize, however, that the middle class also saw an increase in their net worth thanks to inflation, according to CEPR.org. However, this is only because the value of their debt decreased. If middle-class Americans weren’t leveraged extensively with high-interest credit card debt, they wouldn’t see these gains on paper.
In addition to inflation, which affects both lower and middle-income Americans, O’Leary pointed out the danger of additional taxes on economic growth. “It’s a very simple equation,” he told Fox News. “When the government takes money from the individual, they can no longer invest that in a business or in their own retirement or anywhere else. It goes into the meat grinder of government.”
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